The House Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies held a hearing on HUD’s FY12 budget request for public and Indian housing programs (see Memo, 2/18). HUD Assistant Secretary for Public and Indian Housing Sandra Henriquez was the hearing’s sole witness. HUD’s Office of Public and Indian Housing has jurisdiction over public housing, vouchers, and Indian housing programs.
Subcommittee Chair Tom Latham (R-IA) said in his opening statement that HUD’s public and Indian housing programs are some of its most important and challenging programs. But, Chair Latham said, “oversight at public housing agencies (PHAs) has been far too lax.” Given the fiscal environment, this must change, Chair Latham said.
Subcommittee Ranking Member John Olver (D-MA) remarked in his opening statement that he is pleased HUD’s FY12 request would increase funding for tenant-based assistance and fully fund that program. Mr. Olver also referred to the public housing capital fund and Native American Housing Block Grant programs, both of which see increases in HUD’s FY12 request compared to FY11 funding levels.
Mr. Olver also referenced the 302(b) allocations approved by the full House Committee on Appropriations on May 24, calling the allocations to subcommittees “appalling.” (See related article on the allocations in this issue of Memo.)
Ms. Henriquez’s testimony reviewed HUD’s FY12 request for public and Indian housing programs, saying the request “protects the low income families served by HUD’s core rental assistance programs” and prioritizes protecting current recipients of HUD assistance, including 1.1 million families in public housing and more than 2.2 million households that receive tenant-based vouchers. “Indeed, fully 80% of our proposed budget keeps current residents in their homes and provides basic upkeep to public housing while also continuing to serve our most vulnerable populations through our homeless programs.”
Mr. Olver said he would like more information on PHA operating subsidies, since one of HUD’s FY12 proposals would recapture $1 billion in operating subsidies to serve those PHAs with insufficient reserves. Discussion at the hearing on HUD’s operating subsidy proposal, within its FY12 request, which would reduce 2012 funding allocations to PHAs with “excess” reserves accumulated from prior year appropriations for the public housing operating fund. Based on what HUD thinks it can recapture and redirect from existing operating subsidy accounts, HUD is requesting $1 billion less from Congress than it knows is needed in FY12 for public housing operating subsidies. Between the level that HUD is requesting ($3.962 billion) and what HUD says it could recapture ($1 billion), HUD maintains public housing operations will be funded at 100%.
“We believe that PHAs should have a prudent level of operating reserves. That is why we are taking a targeted approach that will reduce 2012 allocations only to PHAs that exceed adequate reserve levels rather than imposing an across-the-board proration. Careful analysis shows that some PHAs have excess reserves in amounts sufficient to justify the proposed reduction in the Operating Fund,” Ms. Henriquez’s testimony says.
In response to questions from Representative David Price (D-NC) about high-performing PHAs being good stewards of their resources and having large reserve funds, Ms. Henriquez said that over-reserved PHAs actually lose points on financial assessments because HUD would rather see the funds spent on updating units than languishing in reserve accounts. Mr. Price noted that “not all reserves are equal” and urged that the dollar amount of reserves and quality of the PHA should come into consideration if HUD were to recapture these subsidies. “There is a danger,” Mr. Price said, “in disincentivizing good behavior and prudent management of funds.”
In response to related questions from Representative Steve Womack (R-AR), Ms. Henriquez said that housing agencies should have four to six months’ funding in their operating reserves, depending on their size, and that those without that level today would not contribute to the recapture effort.
Salaries at PHAs were also discussed at length. In 2010, the media reported the Philadelphia Housing Authority director received an annual salary of more than $300,000 and the director of the Housing Authority of the City of Los Angeles received an annual salary of $450,000, including a $3600 a month housing allowance. Both have lost their positions.
Ms. Henriquez emphasized that HUD does not set or approve compensation levels at PHAs. But she said that HUD is requiring each PHA to report to HUD the compensation packages for their top five paid personnel, which HUD will post on its website. “This will serve as a valuable transparency tool and point of comparison for local PHA boards and local officials in determining appropriate compensation levels,” said Ms. Henriquez in her written testimony.
Chair Latham questioned HUD’s request for an increase of $200 million in administrative fees for the housing choice voucher program. HUD is requesting $1.648 billion for PHAs to administer the voucher program, an increase of $200 million compared to FY11 funding of $1.447 billion, which is $344 million less than HUD requested for FY11. “The lack of detail on this is unacceptable,” Chair Latham said. HUD is currently analyzing administrative data to determine how much it costs a PHA to run an efficient Housing Choice Voucher (HCV) voucher program and will use the findings to develop a formula for allocating administrative fees.
“How can you not know how much it costs to administer a voucher?” Chair Latham asked. Ms. Henriquez responded that with more accurate administration estimates, HUD hopes increase lease-up rates in the program.
Chair Latham also questioned large balances in the Native American Housing Block Grant program, which he understands to be in the range of $1 billion of Native American Housing Assistance and Self-Determination Act (NAHASDA) funding, through the Native American Housing Block Grant, appropriated yet unused. Ms. Henriquez acknowledged the large balances and said HUD is working with tribes to build their capacity to use their funds, but noted that there is no statutory requirement within NAHASDA to expend the funds.
NLIHC’s budget charts are available at: https://www2398.ssldomain.com/nlihc/template/page.cfm?id=28
Ms. Henriquez’s testimony is available at: http://www.nlihc.org/doc/Public-Indian-Housing-FY12-Budget-Request.PDF